august 2014 uw system board of regents budget request

2015-17 Biennial Operating Budget The University of Wisconsin System August, 2014

BOARD OF REGENTS 2015-17 BIENNIAL BUDGET

Table of Contents

SECTION A EXECUTIVE SUMMARY AND BACKGROUND PAGE ([HFXWLYH6XPPDU\ L 8QLYHUVLW\RI:LVFRQVLQ2SHUDWLQJ%XGJHW YLL WR*HQHUDO3XUSRVH5HYHQXH)XQGLQJ YLLL SECTION B BIENNIAL OPERATING BUDGET REQUEST 6WDQGDUG%XGJHW$GMXVWPHQWV % 1HZ,QLWLDWLYHV5HTXHVW7DEOH % 1HZ,QLWLDWLYH'HVFULSWLRQV % 6WDWXWRU\/DQJXDJH&KDQJHV % SECTION C PERFORMANCE MEASURES 3HUIRUPDQFH0HDVXUHV & SECTION D REFERENCE

*RYHUQRUV/HWWHUDQG0DMRU3ROLF\*XLGHOLQHV ':,7D[SD\HUV$OOLDQFHThe Impending Storm '1DWLRQDO*RYHUQRUV$VVRFLDWLRQ$PHULFD:RUNV '

A. EXECUTIVE SUMMARY AND BACKGROUND

i

$XJXVW $JHQGD,WHP

2015-17 BIENNIAL BUDGET REQUEST

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

ii

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

iii

7KHFKDUWRQSDJHYLLVKRZVWKDWWKHVKRUWIDOOVLQUHYHQXHQHHGWREHWDNHQLQWKHQHW*357XLWLRQIRUHGXFDWLQJVWXGHQWVELOOLRQDQGFDQQRWEHDSSRUWLRQHGDPRQJWKHIXOO8:EXGJHWRIELOOLRQ7KHFKDUWRQSDJHYLLLVKRZVWKDWWKHDPRXQWRI*35IXQGLQJGHGLFDWHGWRFRVWWRFRQWLQXHLWHPVOLNHIULQJHEHQHILWVXWLOLWLHVDQGGHEWVHUYLFHKDVLQFUHDVHGVLJQLILFDQWO\VLQFHILVFDO\HDUOHDYLQJDVPDOOHUDPRXQWRIJHQHUDO*35WRPDQDJHWKHVKRUWIDOO7RDGGUHVVWKHSURSRVHGLQLWLDWLYHVGXULQJWKHELHQQLXPthe UW System requests $95.2 million of GPR biennially8:6\VWHPLQVWLWXWLRQVZLOOFRQWLQXHWREHIUXJDOPDQDJHUVRIDYDLODEOH*35WXLWLRQUHVRXUFHVAdministrative costs for the UW System are half of the national average per student$OWKRXJKWKLVORZIXQGLQJIRUDGPLQLVWUDWLRQFRPHVZLWKVRPHULVNV8:6\VWHPLQVWLWXWLRQVZLOOFRQWLQXHGLUHFWLQJDVPDQ\RIWKHLUUHVRXUFHVDVSRVVLEOHWRGLUHFWVHUYLFHVIRUVWXGHQWVDQGVSXUULQJHFRQRPLFGHYHORSPHQWDFURVV:LVFRQVLQ The Universitys Role in Economic Development $LQLWLDWLYHRIWKH1DWLRQDO*RYHUQRUV$VVRFLDWLRQ1*$IRFXVHGRQWKHQHHGWRKDYHPRUHHGXFDWHGLQGLYLGXDOVWRLPSURYHVWDWHVHFRQRPLHV7KH1*$VUHSRUW$PHULFD:RUNV(GXFDWLRQDQG7UDLQLQJIRU7RPRUURZV-REV7KH%HQHILWRID0RUH(GXFDWHG:RUNIRUFHWR,QGLYLGXDOVDQGWKH(FRQRP\GLVFXVVHVWKHQHHGIRUVWDWHSROLFLHVDQGIXQGLQJSULRULWLHVWRVXSSRUWHFRQRPLFJURZWKE\LQFUHDVLQJWKHHGXFDWLRQDQGWUDLQLQJRILWVZRUNIRUFH7KHSDSHUVD\VWKDW

($50.02)

($60.15)

($70.00)

($60.00)

($50.00)

($40.00)

($30.00)

($20.00)

($10.00)

$0.002012-13 2013-14 2014-15

In M

illio

ns $

University of Wisconsin System 2013-15

Structural Deficit (in Millions)

Note: Some institutions have covered cuts with one-time funding from balances. Institutions have spent balances wisely. Institutions cannot continue to cover this structural deficit with one-time funding as it continues to grow.

iv

x $ODFNRIVNLOOHGZRUNHUVLQDUHJLRQDOHFRQRP\FDQFRQVWUDLQJURZWKOLPLWLQJWKHDELOLW\RIHPSOR\HUVWRH[SDQGXQOHVVWKH\PRYHMREVWRZKHUHWDOHQWUHVLGHVRUDFFHSWWKHFRVWRIXSJUDGLQJWKHVNLOORIORFDOZRUNHUV

x $VWKHGHPDQGIRUKLJKO\HGXFDWHGZRUNHUVKDVLQFUHDVHGHPSOR\PHQWRSSRUWXQLWLHVIRU

WKRVHZLWKRXWSRVWVHFRQGDU\FUHGHQWLDOVKDYHGHFOLQHG

x $SSUR[LPDWHO\KDOIRIDOOMRERSHQLQJVRYHUWKHQH[WGHFDGHZLOOUHTXLUHPRUHWKDQDKLJKVFKRROGLSORPD

x (YHU\VWDWHLQWKHQDWLRQFDQUHDOL]HVLJQLILFDQWHFRQRPLFDQGVRFLDOEHQHILWVIURPSURYLGLQJDGGLWLRQDOHGXFDWLRQDORSSRUWXQLWLHVIRULWVFLWL]HQV0RRG\V$QDO\WLFVSURMHFWVWKDWHPSOR\HUVQDWLRQZLGHFRXOGGHPDQGVOLJKWO\PRUHWKDQPLOOLRQZRUNHUVZLWKDSRVWVHFRQGDU\GHJUHHEHWZHHQDQG

x &RPSDULQJWKDWIRUHFDVWZLWK0RRG\VSURMHFWLRQRIHGXFDWLRQDODWWDLQPHQWRIWKH

SRSXODWLRQRYHUWKHVDPHSHULRGWKHUHZRXOGEHDVKRUWIDOOLQH[FHVVRIPLOOLRQZRUNHUVZLWKSRVWVHFRQGDU\GHJUHHV

x 6XFKDVKRUWIDOOZRXOGOLPLWJURZWKLQDIIHFWHGLQGXVWULHVDVHPSOR\HUVFXWEDFNRQ

SURGXFWLRQHPSOR\OHVVHGXFDWHGZRUNHUVDQGRUELGXSWKHZDJHVRIPRUHKLJKO\WUDLQHGZRUNHUVWKHUHE\UDLVLQJLQGXVWU\FRVWV0RUHSRVLWLYHO\PHHWLQJWKHSURMHFWHGLQGXVWU\GHPDQGZRXOGDOORZEXVLQHVVHVWRH[SDQGDQGLQFRPHVWRULVHE\DQHVWLPDWHGELOOLRQRYHUWKHQH[W\HDUV

v

7KHFKDUWWKDWIROORZVVKRZVWKHQDWLRQVSURMHFWHGPLVDOLJQPHQWEHWZHHQWKHHGXFDWLRQOHYHORI$PHULFDQVRYHUDJHDVRIYHUVXVWKHSURMHFWHGHGXFDWLRQDOOHYHOQHHGHGIRUQHZMREVLQ

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navoidable Costs (Standard Budget Adjustments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

vi

&RQVLVWHQWZLWKSDVWSUDFWLFH8:6\VWHPZLOOVXEPLWDQDGYLVRU\UHTXHVWUHODWHGWRXWLOLWLHVFRVWVZKLFKZLOOEHDGGHGE\WKHVWDWHDVSDUWRIWKH*RYHUQRUVEXGJHWDORQJZLWKGHEWVHUYLFHDPRXQWV$GGLWLRQDOIXQGLQJIRUKHDOWKLQVXUDQFHUDWHLQFUHDVHVRULQFUHDVHGFRVWRIRWKHUIULQJHEHQHILWVLQWKHELHQQLXPDUHH[SHFWHGWREHSURYLGHGDVVXSSOHPHQWVIURPWKHVWDWHV&RPSHQVDWLRQ5HVHUYHPerformance Measures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tatutory Language Changes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facultysalaries at UW System institutions have fallen more than 18% below the national average. This large gap is the greatest threat to quality for UW System institutions. The requests to modify the tuition and fee report and to reconcile the auxiliary balance reporting requirements will allow the UW System to operate more efficiently while providing the transparency needed by the Legislature and the public.RELATED REGENT POLICIES 1RQH

Total Budget: $6.098 Billion

/HVV)HGHUDO)XQGV

/HVV*LIWV*UDQWV&RQWUDFWV

/HVV$X[LOLDULHV+RVSLWDOVDQG2WKHU5HFHLSWV

BBBBBBBBBBBBBBBBB

GPR/Tuition Total: $2.527 Billion

*35 %LOOLRQ 7XLWLRQ %LOOLRQ /HVV5HVWULFWHG*35 BBBBBBBBBBBBBBBBB

Net for Educating Students:$2.266 Billion

$917 Million GPR $1.349 Billion Tuition

)HGHUDO)XQGVLQFOXGHIXQGLQJIRUHGXFDWLRQDORSSRUWXQLW\JUDQWVVWXGHQWORDQV3HOOJUDQWVQXUVLQJORDQVZRUNVWXG\IHGHUDOLQGLUHFWFRVWUHLPEXUVHPHQWDQGUHVHDUFK

*LIWV*UDQWVDQG&RQWUDFWVLQFOXGHJLIWVJUDQWVDQGEHTXHVWVIRUORDQVIRUSXUSRVHVODLGRXWLQWKHEHTXHVWDQGJUDQWVIRUVSHFLILFHQWLWLHVIRUHVWU\FRRSHUDWLYHVIRUH[DPSOH

$X[LOLDULHV+RVSLWDOVDQG2WKHU5HFHLSWVLQFOXGHKRXVLQJIRRGVHUYLFHVVWXGHQWXQLRQWH[WERRNVDOHVSDUNLQJKRVSLWDOVDWKOHWLFVWXLWLRQLQFUHDVHJUDQWVDQG7UL6WDWH,QLWLDWLYHGHEWVHUYLFH

5HVWULFWHG*35LQFOXGHVIXQGLQJIRUGHEWVHUYLFH6WDWH/DERI+\JLHQHDQG9HWHULQDU\'LDJQRVWLF/DE

UNIVERSITY OF WISCONSIN SYSTEM 2SHUDWLQJ%XGJHW

vii.

-

200

,000

,000

400

,000

,000

600

,000

,000

800

,000

,000

1,0

00,0

00,0

00

1,2

00,0

00,0

00

1,4

00,0

00,0

00

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Uni

vers

ity o

f Wis

cons

in S

yste

m

2005

-06

to 2

014-

15 G

ener

al P

urpo

se R

even

ue F

undi

ng

Frin

ge B

enef

its

Debt

Ser

vice

Util

ities

Gen

eral

GPR

viii.

B. 2015-17 BIENNIAL OPERATING BUDGET REQUEST

81,9(56,7

Sour

ceO

ne-t

ime

fund

sBa

se F

undi

ngO

ne-t

ime

fund

sBa

se F

undi

ng

Bien

nial

Tot

al

UW

One

-Tim

e Fu

nds

Bien

nial

One

-Ti

me

Fund

s fr

om th

e St

ate

Ong

oing

Bas

e Re

ques

t

Build

ing

the

Tale

nt-B

ased

Eco

nom

yUW

-$

-

$

-

$

State

11.2

5$

-$

11

.25

$

-

$

22

.50

$

Build

ing

the

Tale

nt P

ath

UW-

$

-$

-

$

-

$

-

$

State

-$

6.

40$

-

$

9.

00$

-

$

9.

00$

Build

ing

the

Tale

nt In

fras

truc

ture

UW15

.00

$

-

$

-$

-$

15.0

0$

State

-$

-

$

-$

30.0

0$

-$

30.0

0$

Build

ing

the

Foun

datio

n fo

r Exc

elle

nce

UW27

.30

$

-

$

-$

-$

27.3

0$

State

-$

-

$

-$

27.3

0$

-$

27.3

0$

Tota

lsUW

42.3

0$

-$

-

$

-

$

42

.30

$

42

.30

$

State

11.2

5$

6.40

$

11.2

5$

66.3

0$

#REF

!22

.50

$

66

.30

$

2015

-17

BIEN

NIA

L BU

DGET

REQ

UES

T

FY 2

016

FY 2

017

NEW

INIT

IATI

VES

REQ

UES

T

Bien

nial

B-2

Building the Talent Based Economy

2015-16 Increase in 2016-17 Ongoing Base

Increase GPR Fees (Tuition) GPR/Fees

Background: 2013-15 Economic Development Incentive Grants 7KHELHQQLDOEXGJHWUHTXLUHGWKH%RDUGRI5HJHQWVWRDOORFDWHPLOOLRQDQQXDOO\IRUDQ,QFHQWLYH*UDQW3URJUDP8:6\VWHPLQVWLWXWLRQVZHUHLQYLWHGWRVXEPLWSURSRVDOVIRUQRQEDVHEXLOGLQJJUDQWVIRU(FRQRPLF'HYHORSPHQWSURJUDPVWR

(QFRXUDJHWKHHVWDEOLVKPHQWRUJURZWKRIEXVLQHVVHVLQ:LVFRQVLQFUHDWHRUUHWDLQMREVLQWKHVWDWHRUSURYLGHILQDQFLDODVVLVWDQFHWD[EHQHILWVRUGLUHFWVHUYLFHVWRVSHFLILFEXVLQHVVHVLQGXVWULHVRURUJDQL]DWLRQV

'HYHORSDQHGXFDWHGDQGVNLOOHGZRUNIRUFHE\LQFUHDVLQJWKHQXPEHURIGHJUHHVDZDUGHGLQKLJKGHPDQGILHOGVLQFUHDVHWKHQXPEHURILQWHUQVKLSDQGFRRSHUDWLYHZRUNH[SHULHQFHRSSRUWXQLWLHVIRUVWXGHQWVDQGLQFUHDVHRUHQKDQFHUHVHDUFKDQGGHYHORSPHQWDQG

,PSURYHDIIRUGDELOLW\RISRVWVHFRQGDU\HGXFDWLRQE\UHGXFLQJWKHWLPHWRGHJUHHLQFUHDVLQJRSSRUWXQLWLHVIRUKLJKVFKRROVWXGHQWVWRHDUQFUHGLWWRZDUGDSRVWVHFRQGDU\GHJUHHDQGLPSURYHFUHGLWWUDQVIHUEHWZHHQKLJKHUHGXFDWLRQLQVWLWXWLRQV

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

Request: Focusing on Economic Development and Business Assistance 7KH(FRQRPLF'HYHORSPHQW,QFHQWLYH*UDQWSURJUDPUHSUHVHQWVDQLPSRUWDQWVWUDWHJLFLQLWLDWLYHWRFRQWLQXHWRHIIHFWLYHO\DOLJQ8:FDPSXVFROODERUDWLRQVZLWKHFRQRPLFLQLWLDWLYHVZKHUHYHUWKH\RFFXU&ROOHFWLYHO\WKHVHHIIRUWVZLOOSURYLGHGLUHFWEHQHILWVLQWKHVKRUWWHUPWREXVLQHVVHVDQGFRPPXQLWLHVVWDWHZLGHDQGFUHDWHQHZDQGH[SDQGHGRSSRUWXQLWLHVIRURXUVWXGHQWVDQGIDFXOW\7KH8:6\VWHPUHTXHVWVPLOOLRQLQRQHWLPH*35IXQGLQJLQWRFRQWLQXHWKHVHHIIRUWVZLWKDVWURQJHUIRFXVRQMREFUHDWLRQEXVLQHVVDVVLVWDQFHDFWLYLWLHVFRPPHUFLDOL]DWLRQHIIRUWVDQGVXSSRUWIRUHQWUHSUHQHXULDODFWLYLWLHV1RQEDVHEXLOGLQJJUDQWDZDUGVZRXOGEHDZDUGHGRQDFRPSHWLWLYHEDVLVWR8:,QVWLWXWLRQVLQIRUSURMHFWVRUSURJUDPVWKDWDGYDQFHRQHRUPRUHRIWKHIROORZLQJDFWLYLWLHV

x Economic development programs, as defined in s. 36.11 (29r) (a)

o (QFRXUDJHWKHHVWDEOLVKPHQWRUJURZWKRIEXVLQHVVHVLQ:LVFRQVLQ

B-3

o &UHDWHRUUHWDLQMREVLQ:LVFRQVLQ

x Increase or enhance research and development activities with a focus on those that lead to commercialization of products

x Programs that provide financial and/or material support for UW faculty and/or students engaged in entrepreneurial activities

*UDQWDZDUGVPD\EHDZDUGHGIRUSURJUDPVRUSURMHFWVIRUDSHULRGRIXSWR\HDUV)XQGLQJZLOOFRYHURQHWLPHFRVWVLQFXUUHGGXULQJWKHDZDUGSHULRGWRGHYHORSRUHQKDQFHSURMHFWVSURSRVDOV7KH8:6\VWHPZLOOUHSRUWRQSURJUDPEXGJHWJRDOVDQGRXWFRPHVDQQXDOO\

B-4

Building the Talent Path



Background $VWKHGHPRJUDSKLFWUHQGVLQ:LVFRQVLQSUHGLFWDQDJLQJSRSXODWLRQDQGDVWDJQDWLQJZRUNIRUFHWKHUHLVDQHHGWRVWUHQJWKHQSDWKVWKDWOHDGWDOHQWHGUHVLGHQWVLQWRKLJKHUHGXFDWLRQDQGLQQRYDWLYHFDUHHUV8QOHVVWKHVWDWHFDQLQFUHDVHWKHQXPEHURIUHWXUQLQJDGXOWVDQGILUVWJHQHUDWLRQVWXGHQWVZKRUHFHLYHLQWHUQVKLSVDQGDUHFRQQHFWHGWREXVLQHVVHVLQDUHDVRIVWDWHQHHGWKHHFRQRP\ZLOOEHXQDEOHWRJURZVHHWKH0DUFK:LVFRQVLQ7D[SD\HUV$OOLDQFHDUWLFOHWLWOHG7KH,PSHQGLQJ6WRUP7KLVLQLWLDWLYHUHTXHVWVPLOOLRQELHQQLDOO\IRUWKHIROORZLQJLQLWLDWLYHV

Request Course Options7KHVWDWHKDVDJJUHVVLYHO\PRYHGIRUZDUGZLWKD&RXUVH2SWLRQV3URJUDPWKDWZLOOLQFUHDVHRSSRUWXQLWLHVIRU:LVFRQVLQKLJKVFKRROVWXGHQWVWRHQUROOLQKLJKVFKRROFRXUVHVIRUFROOHJHGHJUHHFUHGLW7KH&RXUVH2SWLRQV3URJUDPZLOOUHGXFHWKHFRVWRIDFKLHYLQJDFROOHJHGHJUHHDQGVKRXOGDOVRUHGXFHWKHWLPHUHTXLUHGWRJUDGXDWHRQFHHQUROOHGRQFDPSXVSURYLGLQJEHQHILWVWRWKHVWXGHQWVIDPLOLHVDQGWKHVWDWH7KLVLQLWLDWLYHVHHNVWRLQFUHDVHWKHQXPEHURIVWXGHQWVLQYROYHGLQWKH&RXUVH2SWLRQVSURJUDPE\LQWKHVHFRQG\HDURIWKHELHQQLXPDevelopmental Education.,QWKH6\VWHPZLGH5HPHGLDO(GXFDWLRQ:RUN*URXSSUHVHQWHGDUHSRUWRQNH\UHFRPPHQGDWLRQVIRULPSURYLQJVWXGHQWVXFFHVVLQKLJKHUHGXFDWLRQWKURXJKUHPHGLDOHGXFDWLRQLQQRYDWLRQ&UHDWLQJQHZZD\VWRVXSSRUWVWXGHQWVDVWKH\DGYDQFHWKURXJKUHPHGLDOHGXFDWLRQFDQGHFUHDVHWLPHWRGHJUHHDQGWKHFRVWRIDQHGXFDWLRQ7KLVLQLWLDWLYHUHTXHVWVIXQGLQJWRSLORWFXWWLQJHGJHGDSSURDFKHVWRUHPHGLDOHGXFDWLRQDW8:LQVWLWXWLRQVDQGWRLPSOHPHQWWKRVHWKDWDUHWKHPRVWVXFFHVVIXO

Initiative FY 2016 FY 2017 Ongoing &RXUVH2SWLRQV 0LOOLRQ 0LOOLRQ 0LOOLRQ'HYHORSPHQWDO(GXFDWLRQ 0LOOLRQ 0LOOLRQ 0LOOLRQ7UDQVIHU,QIRUPDWLRQ6\VWHP 0LOOLRQ 0LOOLRQ 0LOOLRQ8:)OH[2SWLRQ 0LOOLRQ 0LOOLRQ 0LOOLRQ7DOHQW0DUNHW 0LOOLRQ 0LOOLRQ 0LOOLRQ'LYHUVLW\ 0LOOLRQ 0LOOLRQ 0LOOLRQ7RWDO 0LOOLRQ 0LOOLRQ 0LOOLRQ

B-5

Transfer Information System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lex Option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alent Market Initiative.$7DOHQW0DUNHWLVDFRPSXWHUDFFHVVLEOHUHVRXUFHWKDWZLOOFRQQHFW:LVFRQVLQEXVLQHVVHVZLWKVWXGHQWVZKRDUHJUDGXDWLQJIURP8:LQVWLWXWLRQV6WXGHQWVZLOOEHDEOHWRSRVWWKHLUSURIHVVLRQDOLQWHUHVWVDQGTXDOLILFDWLRQVDQGHPSOR\HUVFDQSRVWLQWHUQVKLSVDQGMRERSSRUWXQLWLHV Diversity.$VWKH6WDWHRI:LVFRQVLQEHFRPHVPRUHGLYHUVHDVDZKROHWKHUHLVDQHHGWRVXSSRUWWKHJURZLQJQXPEHURIVWXGHQWVIURPGLYHUVHEDFNJURXQGVDQGWRSUHSDUHDOOVWXGHQWVIRUVXFFHVVLQDGLYHUVHFXOWXUHDQGZRUNSODFH

B-6

Building the Talent Infrastructure



Why Invest in Building Wisconsins Talent Infrastructure? 5HFHQWUHSRUWVDQGDUWLFOHVE\WKH1DWLRQDO*RYHUQRUV$VVRFLDWLRQ$PHULFD:RUNV(GXFDWLRQDQG7UDLQLQJIRU7RPRUURZV-REVWKH:LVFRQVLQ7D[SD\HUV$OOLDQFH7KH,PSHQGLQJ6WRUPDQGWKH&RPSHWLWLYH:LVFRQVLQ%H%ROGKDYHHPSKDVL]HGWKHQHHGIRUDJUHDWHUIRFXVRQVWDWHVDQGKLJKHUHGXFDWLRQZRUNLQJWRJHWKHUWRDGGUHVVHFRQRPLFDQGZRUNIRUFHQHHGV7DOHQW,QIUDVWUXFWXUHQHHGVLQ:LVFRQVLQKDYLQJWKHHGXFDWHGZRUNIRUFHQHHGHGWRPHHWWKHGHPDQGVRI:LVFRQVLQVHFRQRP\WRGD\DQGWRPRUURZDUHFOHDUDQGPXVWEHDGGUHVVHGWisconsin and U.S. Employers Need More Graduates in Critical Industries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

o Agriculture & Food Manufacturing,

o Finance, Insurance & Real Estate,

o Healthcare, o Manufacturing, o Transportation, and o Water Management & Research

Higher Educational Attainment Benefits Families, Businesses, and Wisconsins Economy ,QYHVWLQJLQ:LVFRQVLQV7DOHQW,QIUDVWUXFWXUHQHHGVIRUWKHIXWXUHZLOODOVRKHOSDGGUHVVFKDOOHQJHVDQGRSSRUWXQLWLHVDVVRFLDWHGZLWKHGXFDWLRQDODWWDLQPHQW7KH1DWLRQDO*RYHUQRUV$VVRFLDWLRQIRXQGWKDWDVWKHGHPDQGIRUKLJKO\HGXFDWHGZRUNHUVLQFUHDVHGHPSOR\PHQW

According to the study, these six critical industries account for more than 50% of Wisconsins GDP and yet

ManpowerGroups 2012 study on the supply of critical skills for these sectors shows that these industries are already feeling the impact of critical skill and talent shortages in

healthcare, manufacturing, and financial services.

B-7

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

o :LVFRQVLQEXVLQHVVHVZLOOKDYHWKHHGXFDWHGZRUNIRUFHLWQHHGVWRFRPSHWHQDWLRQDOO\DQGJOREDOO\

o )DPLOLHVZLOOKDYHPRUHGLVFUHWLRQDU\LQFRPHWRLQYHVWDQGVSHQGRQ:LVFRQVLQEXVLQHVVHVWRKHOSGULYHDQGEXLOGRXUHFRQRP\DQG

o )DPLOLHVZLWKKLJKHULQFRPHVZLOOSD\PRUHLQIXWXUHWD[UHYHQXHVIRU:LVFRQVLQDVGHPRJUDSKLFWUHQGVSXWSUHVVXUHRQVWDWHEXGJHWV

How to Help Build Wisconsins Talent Infrastructure (DFKLQVWLWXWLRQZRXOGVXEPLWSURSRVDOVWRUHFHLYHRQJRLQJEDVHIXQGLQJWRPDNHLPSURYHPHQWVLQSULRULW\DUHDVIRUWKH%RDUGDQGWKH6WDWHWKDWDOLJQ8:VSURJUDPVZLWKVWDWHQHHGVZLWKDJRDORILPSURYLQJWKHHFRQRP\DQGLQFUHDVLQJEXVLQHVVFRPPXQLW\HQJDJHPHQWWKURXJKEXLOGLQJ:LVFRQVLQV7DOHQW,QIUDVWUXFWXUH

B-8

7KH8:6\VWHPUHTXHVWVPLOOLRQLQRQJRLQJ*35IXQGLQJEHJLQQLQJLQIRUEDVHEXLOGLQJJUDQWVWKDWZRXOGEHDZDUGHGRQDFRPSHWLWLYHEDVLVWR8:,QVWLWXWLRQVIRUSURJUDPVWKDWEXLOGWKHWDOHQWLQIUDVWUXFWXUH:LVFRQVLQUHTXLUHVWRPHHWWKHJURZLQJGHPDQGVE\EXVLQHVVHVIRUDQLQFUHDVLQJO\ZHOOHGXFDWHGDQGWUDLQHGZRUNIRUFH*UDQWVZRXOGEHDZDUGHGWR8:LQVWLWXWLRQVIRUWKHIROORZLQJSURJUDPVDFWLYLWLHV

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

Eligible Activities Programs that increase the number of bachelors, masters, professional, and doctoral degrees in fields for

which occupational demand is high. Programs that increase the number of opportunities available for undergraduate and graduate students to

gain work experience in their fields through internships, cooperative work experiences, and other job opportunities.

Programs that attract and retain undergraduate and graduate students in degree fields for which occupational demand is high.

Programs that recruit and retain outstanding faculty in high-demand fields to ensure institutions have the capacity to educate the graduates needed in high-demand occupations.

B-9

Building the Foundation for Excellence



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

GUDZGRZQZLOOFRQWLQXHLQ)

STATUTORY LANGUAGE CHANGE REQUESTS

$87+25,7

C. PERFORMANCE MEASURES

DOA Required 2015-17 Biennial Budget Performance Measures for the University of Wisconsin System

Measure 1: Undergraduate Degrees Goal: Meet or exceed current plans to increase undergraduate degrees

conferred (Associate and Bachelor's).

Year Plan Actual 2003-04 25,049 2004-05 24,129 2005-06 24,103 2006-07 25,096 2007-08 25,465 2008-09 25,992 2009-10 26,317 26,297 2010-11 26,910 27,087 2011-12 27,254 28,189 2012-13 27,723 28,789 2013-14 28,041 2014-15 28,723 2015-16 29,339 2016-17 30,040 2017-18 30,636 2018-19 31,112

Progress: The University of Wisconsin Systems More Graduates initiative

calls for an additional 80,000 high-quality undergraduate degrees over the 2008-09 level by 2025-26.

Although the initiative focuses on undergraduate degrees, graduate

education remains an important part of the UW Systems mission.

C-1

Measure 2: Participation Rate Goal: Provide access by enrolling at least 32 percent of Wisconsin high

school graduates immediately after graduation.

Fall Term After HS Graduation

Plan

Actual

2003 32.0% 32.0% 2004 32.0% 33.0% 2005 32.0% 32.6% 2006 32.0% 32.5% 2007 32.0% 33.1% 2008 32.0% 32.4% 2009 32.0% 31.9% 2010 32.0% 31.7% 2011 32.0% 31.9% 2012 32.0% 31.5% 2013 32.0% 2014 32.0% 2015 32.0% 2016 32.0% 2017 32.0% 2018 32.0%

Progress: The University of Wisconsin System is committed to serving the

residents of the State of Wisconsin, not only through the enrollment of high school graduates but also through the enrollment of transfer students and nontraditional-aged students.

C-2

Measure 3: Retention Rate Goal: Meet or exceed current plans to increase the rate at which new

freshmen return to the same institution for the second year of study.

Year (Entering Class)

Plan

Actual 2004-05 (Fall 2003) 80.2% 2005-06 (Fall 2004) 80.5% 2006-07 (Fall 2005) 79.2% 2007-08 (Fall 2006) 79.2% 2008-09 (Fall 2007) 79.3% 2009-10 (Fall 2008) 80.2% 2010-11 (Fall 2009) 79.5% 80.8% 2011-12 (Fall 2010) 80.4% 79.6% 2012-13 (Fall 2011) 80.5% 80.2% 2013-14 (Fall 2012) 80.9% 80.7% 2014-15 (Fall 2013) 81.3% 2015-16 (Fall 2014) 81.8% 2016-17 (Fall 2015) 82.0% 2017-18 (Fall 2016) 82.2% 2018-19 (Fall 2017) 82.5% 2019-20 (Fall 2018) 82.7%

Progress: A students persistence to the second year of study is an important,

early indication of accomplishing the long-term graduation objective. The University of Wisconsin System is committed to providing students with the opportunity to successfully persist to the second year and beyond to graduation.

Plans were developed in conjunction with the More Graduates

initiative. They reflect efforts to increase enrollments of historically underserved populations that may face greater obstacles to persistence in higher education.

C-3

Measure 4: Graduation Rate Goal: Meet or exceed current plans to increase the rate at which new

freshmen earn a bachelor's degree at the same institution within six years.

Year* (Entering Class)

Plan

Actual

2004-05 (Fall 1998) 56.2% 2005-06 (Fall 1999) 57.3% 2006-07 (Fall 2000) 58.0% 2007-08 (Fall 2001) 58.7% 2008-09 (Fall 2002) 59.3% 2009-10 (Fall 2003) 59.7% 2010-11 (Fall 2004) 59.4% 60.4% 2011-12 (Fall 2005) 59.8% 59.3% 2012-13 (Fall 2006) 59.9% 59.6% 2013-14 (Fall 2007) 60.4% 59.3% 2014-15 (Fall 2008) 60.8% 2015-16 (Fall 2009) 61.0% 2016-17 (Fall 2010) 61.3% 2017-18 (Fall 2011) 61.7% 2018-19 (Fall 2012) 62.1% 2019-20 (Fall 2013) 62.4%

*Year denotes the reporting year not the academic year the degree was completed. Progress: Continuing to increase graduation rates is an important strategy for

reaching the goal of the University of Wisconsin Systems More Graduates initiative.

C-4

D. REFERENCE

SCOTT WALKER OFFICE OF THE GOVERNOR

STATE OF WISCONSIN

WISCONSIN IS OPEN FOR BUSINESS WWW.WALKER.WI.GOV (608) 266-1212 FAX: (608) 267-8983

P.O. BOX 7863 MADISON, WI 53707

July 9, 2014

Dear Agency Head:

Our administration took office at a critical time in Wisconsins history. Budget deficits, unemployment, low wages, and general stagnation created a fiscal and economic crisis. The situation was made even worse by poor planning. After years of past administrations kicking the can down the road, our team implemented long overdue reforms to put Wisconsin on the path to prosperity.

Together, we eliminated a $3.6 billion deficit. We truly balanced the state budget without tax increases or gimmicks and one-time fixes. We reached a balance of $279 million in the Budget Stabilization Fund, the largest fund balance in its history.

Today, Wisconsins future is bright. Our states economy is improving, over 100,000 new jobs have been created and wages are rising. General manufacturing is again on the rise, as Wisconsin is one of the two most manufacturing intensive states and has achieved top-tier status for manufacturing job growth according to the US Bureau of Labor Statistics, while our agricultural roots continue to provide prosperity across the state, feeding millions and leading the dairy industry. These two sectors are often linked to our great state, but we are seeing significant growth in other fields, such as medical technology, software, and electrical equipment.

Most importantly, our families are enjoying good news in the economic indicators that matter most to them. The unemployment rate continues to decline, hitting 5.7 percent in May, the lowest point since 2008, and remains below the national rate; personal income increased at a rate of 2.7 percent, above the national average; and property values are on the rise, restoring our ability to successfully pursue the American Dream.

Wisconsinites know best how to spend their money, so we put taxpayers back in charge. We lowered property taxes each year of this administration, including three times in the last year through 2013 Wisconsin Acts 20, 46, and 145. As a result of our property tax controls, the property taxes on the typical Wisconsin home will be lower in 2014 than they were in 2010.

We intend to continue this trend and are committed to holding the line on property taxes by ensuring the state property tax burden on the average Wisconsin home in 2018 is lower than it is 2014. We reduced income taxes across the board and even modernized our tax withholding tables, allowing Wisconsin families to take home more of their hard-earned money in their paychecks.

While providing long-overdue tax relief, we have also succeeded in restoring economic order behind the scenes. Our Generally Accepted Accounting Principles (GAAP) status has improved dramatically, from a $2.9 billion deficit in 2010 under the previous

D-1


STATE OF WISCONSIN



administration to $1.7 billion in 2013. This tells the nation that Wisconsins economy is built on a sound foundation. Further validating our sustainable economic outlook, Wisconsin was given a AAA transportation revenue bond rating and we are maintaining other strong bond ratings while other states see their ratings fall.

The state pension system is the only fully funded pension system in the country. And Wisconsin's per capita pension and debt ratio is one of the best in the U.S.

Our direct approach to successfully addressing challenging economic circumstances and restoring optimism toward our future has not gone unnoticed. Just recently, Wisconsin ranked 17th on CNBCs Top States for Business, up from 29th in 2010. This year, Wisconsin ranked 14th on Chief Executive Magazines list of Best & Worst States for Business, up from 41st in 2010. And in a poll by the states chamber of commerce, 95 percent of job creators said they thought Wisconsin is headed in the right direction, up from 10 percent in 2010.

These achievements were not gained easily or overnight. Both the 2011-13 and 2013-15 biennial budgets met our high standards of responsibility, and 2011 Wisconsin Act 10 provided our local partners with tools to meet their unique challenges.

Consistent with our fiscal policies, we established new programs to help our citizens achieve family-supporting employment in a changing economy. We listened to job seekers and job creators, and we will continue to help bring them together. Programs such as Wisconsin Fast Forward represent unique partnerships among our universities, technical colleges, businesses, and state government to train workers for high-demand fields. We already learned that a capable and flexible workforce is a critical ingredient in providing opportunities, and we will continue to seek innovative strategies to build on our reputation of having some of the hardest-working citizens in the nation.

In training and education, we will continue our efforts to leverage technology to provide students in all corners of the state with access to our world-class institutions, as we did with the UW Flexible Option. In higher education, we expanded student opportunity and access by freezing tuition for two years, the first two-year tuition freeze in UW System history, and we are committed to continuing this freeze and exploring additional mechanisms for expanding higher education opportunities for our students.

All of these programs and policies have built a better Wisconsin. However, we must also maintain and rebuild our physical infrastructure, including transportation, energy, and telecommunications. We will continue to invest significant resources in our transportation system and improve our ability to move resources and products to market.

D-2


STATE OF WISCONSIN



We accomplished such goals in a transparent fashion. Earlier this year, we launched OpenBook Wisconsin, providing citizens with information to actively engage their government and to appropriately hold us accountable for using their money wisely. This effort will continue with the State Transforming Agency Resources (STAR) project, which will greatly enhance our ability to manage our finance, budget, procurement, business intelligence, and human resource functions. While such enterprise-level reforms are common in the private sector, our state continues to operate on systems developed as long ago as the 1960s. You and your teams have already worked hard on the initial phases of this transformation and we will continue to collaboratively implement this project.

All of these philosophies and goals require constant fiscal discipline. Therefore, just as in the last biennial budget, I am directing most agencies to maintain their overall fiscal year 2015-16 and 2016-17 GPR budgets at the fiscal year 2014-15 adjusted base. The same zero-growth targets will also apply to SEG-funded administrative operations. Agency requests should focus on continuing to grow our states economy and improve the lives of our fellow Wisconsinites. Agencies are encouraged to reform or even eliminate obsolete and outdated programs in order to fund new initiatives within their current base, rather than seeking additional funds or positions.

Our state is in a strong position to continue its successes and be a model for the nation. We will continue on this path even as we see concerning signs at the federal level. Our nations recent fiscal policies have not brought about the return to prosperity we are seeing here in Wisconsin. In some cases, the federal government is acting as an anchor rather than a sail. Funding cuts, discretionary and selective government shutdowns, and the continuation of massive deficits could jeopardize much of what we have achieved here in Wisconsin.

As required by law, agency budget requests are due on September 15, 2014. The Major Budget Policies and Budget Instructions follow this letter. Please review them carefully as you prepare and prioritize your requests. Technical budget instructions will again be available on the State Budget Office SharePoint site.

As always, thank you for your hard work serving our citizens every day. In partnership with our professional state employees, we will continue to deliver high quality public services and meet the high expectations of our proud state. And we will continue working together to move Wisconsin forward.

Sincerely,

SCOTT WALKER Governor

D-3

MAJOR BUDGET POLICIES 2015-17 BUDGET TARGETS x Agencies should prepare their 2015-17 biennial budget requests based on 100 percent of

their fiscal year 2014-15 adjusted base.

-- All agencies should assume there will be zero growth in overall GPR appropriations in each fiscal year during the 2015-17 biennium, and specific program needs should be managed within this general constraint.

-- Exceptions will occur only for K-12 school aids; required basic cost-to-continue needs for

the state's institutions, i.e., the Department of Corrections and the Department of Health Services institutions; entitlement and related assistance programs in the Department of Health Services (e.g., Medical Assistance), the Department of Children and Families' Division of Safety and Permanence, and the Department of Workforce Development's Division of Vocational Rehabilitation; and housekeeping adjustments like standard budget adjustments, fuel and utilities, and debt service.

x Agencies are reminded that, under 2013 Wisconsin Act 20, Section 9252(1)(a), many

agencies were required to lapse or transfer, from PR or GPR appropriations, a total of $38.3 million annually to the general fund in the 2013-15 biennium. This lapse requirement was extended to include fiscal year 2015-16 by 2013 Wisconsin Act 145, Section 44m. Agencies should plan accordingly to ensure sufficient funds are available to meet this lapse requirement.

-- Agencies should not submit any request to remove or modify this requirement as part of

their biennial budget request. x The zero growth policy will also apply to the SEG-funded administrative operations

appropriations in all agencies that are supported by the transportation fund, the conservation fund, the environmental fund and the lottery fund.

x Funding requests for other types of appropriations and other funding sources in both years

should be limited to revenue availability and only the highest priority programmatic needs. x Except for standard budget adjustments, routine budget items should be handled in

agencies' base budgets regardless of fund source. x Agencies should not submit requests related to anticipated changes to existing systems or

processes that may result from the State Transforming Agency Resources (STAR) project.

x In developing their biennial budget requests, agencies should fundamentally review missions and priorities, exploring opportunities to reallocate resources, integrate programs and consolidate functions.

x Any areas needing additional staff must be met through base reallocations.

D-4

Note: Agencies must receive approval from the State Budget Office before proposing to use funding sources in another agency to stay within budget targets, to absorb operations' reductions or to fund any new initiatives.

x Proposals that transfer functions or programs, including related costs and staff, between

agencies should result in zero growth in overall state appropriations (i.e., the transferring agency should have lower overall appropriations to offset the increase at the receiving agency). All agencies involved in the transfer should notify the State Budget Office during the initial stages of considering any such proposal to facilitate review of the request and allocation of any projected savings between the agencies.

x Where reductions and efficiencies in state operations result in reductions in positions,

agencies should make all efforts to accomplish the reductions without layoffs. PERFORMANCE MEASUREMENTS IN BUDGETING x Agencies need to report on the performance measures they identified for previous biennial

budgets. These measures should relate to agencies' broad Chapter 20 budget programs. If needed to capture significant shifts in agency function, additional measures could be added; however, only a few measures should be presented so there is a clear focus on results.

x For the 2015-17 budget, agencies need to report actual outcome measures through fiscal

year 2012-13 and fiscal year 2013-14. Planned outcome measures should be listed for fiscal year 2014-15, fiscal year 2015-16 and fiscal year 2016-17. Agencies should track and maintain data going forward to present actual performance data for a fiscal year compared to planned performance. (A calendar year may be used if data is collected on that basis. Please note where calendar years are used.)

x The State Budget Office will include performance measures developed by an agency in the

Executive Budget Book, and agencies should reference measures in decision items, where relevant.

x Agency descriptions and performance measures will be included in the state budget system

and must be updated in that system. It is important for agencies to follow the prescribed format to ensure consistency and compatibility.

BUDGETING FOR INFORMATION TECHNOLOGY Requests for funding of information technology projects should identify the link between the project and the state's business goals, conformity to the Department of Administration's Policies and Procedures for Information Technology Management, and provide specific information about each project, including executive sponsorship. Consistent with information technology strategic planning, project definitions must include a standard return on investment (ROI) calculation.

D-5

BUDGETING FOR DEPARTMENT OF ADMINISTRATION RATE CHANGES Agencies should not reflect anticipated rate changes from the various divisions within the Department of Administration in their 2015-17 budget requests. Forecasting of rates and impacts on individual agency budgets will be addressed by the Department of Administration in developing the Governor's 2015-17 budget. FEDERAL FUNDS The state has a goal of increasing the ongoing receipt of federal funds where the use of federal funding is consistent with state program goals. In order to increase the amount of federal funds received, agencies should conduct the following review: x Examine existing grant awards to ensure that they are fully utilized and consistent with

agency priorities. If unexpended grant authority is available, the agency should reallocate the funds to other activities to the extent possible under state and federal rules.

x Agencies may also identify, in the form of a policy paper submitted on September 15,

additional federal grant opportunities that were not included in the agency's request. Such opportunities may be considered for funding by the State Budget Office during budget deliberations.

STATUTORY LANGUAGE GUIDELINES x Agencies should seek to limit policy items unrelated to appropriation changes for inclusion in

the Governor's budget. Note: Please contact your State Budget Office analyst to discuss whether a particular

initiative is appropriate for submission as a budget request. x Agencies should not submit extensive lists of technical or housekeeping changes for

inclusion in the Governor's budget. Proposed changes for separate nonbudget legislation can be submitted to the State Budget Office for review and approval, separate from the budget request.

Note: Please contact your State Budget Office analyst if these types of changes are

sought. x As in past budgets, prior to September 15, agencies may work directly with the Legislative

Reference Bureau in preparing statutory language items related to the budget. After September 15, all drafting and redrafting requests related to the budget must come from the State Budget Office.

x The Legislative Reference Bureau strongly discourages agencies from submitting budget bill

drafts that agencies have drafted. Instead, agencies should submit memoranda identifying what they are seeking to accomplish.

x The detailed budget instructions will provide more information on statutory language

submittal requirements.

D-6

BUDGET SUBMITTAL DUE DATES AND PROCEDURES x Formal budget requests are due Monday, September 15, 2014. Send four (4) copies to the

State Budget Office and two (2) copies directly to the Legislative Fiscal Bureau. x State Budget Office staff will be available to meet with individual agencies to explain budget

policies and procedures, and discuss any agency concerns. x Implementation of the new budget development system may result in changes in policies

and procedures. Additional information will be forthcoming on any changes. INFORMATION ON THE WEB x The Budget Instructions will be available on the State Budget Office Web site at

http://www.doa.state.wi.us/Divisions/Budget-and-Finance/Biennial-Budget.

-- Periodic information updates will be posted to this Web site and the State Budget Office SharePoint site, so agencies should check these sites regularly.

D-7

taxwis

Many aspects of government and the economytax collections and stock prices, for exampleare GLIFXOWWRSUHGLFW%XWIXWXUHVFKRROHQUROOPHQWVDQGZRUNIRUFHQXPEHUVDUHQRW0HWDSKRULFDOO\WRGD\VED-ELHVDUHWRPRUURZVVWXGHQWVDQGQH[WZHHNVZRUNLQJPHQDQGZRPHQ

As the saying goes, demography LV GHVWLQ\ 3RSXODWLRQ WUHQGV WKDWKDYHEHHQEXLOGLQJIRUGHFDGHVDUHQRZFRPLQJKRPH:LVFRQVLQLVXQGHUJRLQJ DPDMRU GHPRJUDSKLFshift that will adversely impact employers, taxpayers, government UHYHQXHV DQG WKH VWDWH HFRQRP\VFDSDFLW\WRJURZ

The seeds were sown in the years DIWHU:RUOG:DU,,ZKHQUHWXUQLQJ*,VPDUULHG KDG FKLOGUHQ EXLOWKRXVHV DQG ERXJKW DOO WKDWZHQWZLWK WKHPIXUQLWXUH DSSOLDQFHVDXWRPRELOHVDQGUHPRGHOLQJ$VWKHQDWLRQVSRSXODWLRQVXUJHGVRGLGWKH$PHULFDQHFRQRP\

Over the next six decades, the GHPRJUDSKLFWLGDOZDYHRIPDWXULQJEDE\ ERRPHUV LQXQGDWHG DOPRVWeverything in its path, leaving new mores and lifestyles, new political DQG VRFLHWDO LQVWLWXWLRQV DQG QHZWHFKQRORJLHVDQGZHDOWK

1RZDVWKHVHERRPHUVEHJLQWRUHWLUHWKHLURYHUVL]HGJHQHUDWLRQVLP-SDFWZLOODJDLQEHIHOWEXWLQDQHZDQGOHVVSRVLWLYHZD\$VJURZWKLQWKHZRUNIRUFHVWDOOVMREJURZWKZLOO

VORZDVZHOO,WLVGLIFXOWWRFUHDWHMREVZKHQ WKHUH DUH QR SHRSOH WROOWKHP,WLVDOVRGLIFXOWWRIXQGSXEOLF VHUYLFHV LI HPSOR\PHQW DQGWD[UHYHQXHVDUHQRWJURZLQJ

LOOKING BACK 7KHSURYHUELDO WHD OHDYHVKDYH

ORQJ EHHQ WKHUH IRU:LVFRQVLQVSROLWLFDO FLYLF DQG EXVLQHVV OHDG-HUV WR UHDGLI WKH\ KDGZDQWHG'XULQJWKHVELUWKRIWKHEXONRI WKH EDE\ERRP FRKRUW SXVKHGVWDWHSRSXODWLRQXSVKDUSO\DQQXDOJURZWKDYHUDJHG

Also in this issue:

:LVFRQVLQ ,QFRPH5LVLQJ :LV-consin Government Employment 6FKRRO)DFWVDWD'LVFRXQW

1RTXHVWLRQ LV VRGLIFXOW WR DQVZHUDVWKDWWRZKLFKWKHDQVZHULVREYLRXV1REHO/DXUHDWH*HRUJH%HUQDUG6KDZ

7KHLPSHQGLQJUHWLUHPHQWRIWKHEDE\ERRPJHQHUDWLRQZLOOKDYHVLJQLFDQWHIIHFWVRQ:LVFRQVLQVHFRQRP\RYHUWKHQH[W\HDUV$VWKLVODUJHFRKRUWUHWLUHVWKHVL]HRI:LVFRQVLQVZRUNIRUFHZLOOVWDOOWKHZRUNLQJDJHSRSX-ODWLRQLVH[SHFWHGWRGHFOLQHEHWZHHQDQG2QO\RIWKHVWDWHVFRXQWLHVDUHH[SHFWHGWRVHHLQFUHDVHVLQUHVLGHQWVDJHVWRDQGRQO\VL[ZLOOVHHLQFUHDVHVRIPRUHWKDQ:RUNLQJDJHSRSXODWLRQVDUHH[SHFWHGWRGURSPRUHWKDQLQQRUWKHUQFRXQWLHV

The Impending StormChanging Demographics and Wisconsins Economic Future

THE WISCONSIN TAXPAYER

$VHUYLFHRIWKH:LVFRQVLQ7D[SD\HUV$OOLDQFH

Vol. 82, Number 3 | March 2014

D-8

The Wisconsin Taxpayer

%XWWKRVHLQFUHDVHVVORZHGRYHUWKHQH[WWKUHHGH-FDGHV'XULQJWKHHFRQRPLFDOO\FKDOOHQJHGVVWDWHSRSXODWLRQJURZWKDYHUDJHGRQO\SHU\HDUVHH)LJXUH:LWKWKHWHFKQRORJ\ERRPRIWKHVKHOS-LQJWRVSXU:LVFRQVLQVHFRQRP\SRSXODWLRQJURZWKUHFRYHUHGEULH\LQFUHDVLQJWRDERXWSHU\HDUHowever, that did not last: State growth averaged only GXULQJWKHUVWGHFDGHRIWKHQHZPLOOHQQLXP

$VJURZWKUDWHVVORZHGDPDMRUVKLIWLQWKHDJHFRPSRVLWLRQRIWKHVWDWHRFFXUUHG$VEDE\ERRPHUVDJHG WKH\PRYHG LQWR WKHLU SULPHZRUNLQJ \HDUV'XULQJWKHZRUNLQJDJHSRSXODWLRQURVHIURPWZRPLOOLRQWRQHDUO\PLOOLRQVHH)LJ-XUH6FKRRODJHSRSXODWLRQVSHDNHGDURXQGDQGDUHQRZEHORZWKDWOHYHO

A GLANCE AT THE FUTURE 6WDWH GHPRJUDSKHUV GRQW H[SHFW D UHYHUVDO RI

VORZSRSXODWLRQJURZWKRYHUWKHQH[WWKUHHGHFDGHVDJDLQVHHFKDUWDERYH$IWHUUHDFKLQJEHWZHHQDQGWKH\H[SHFWDYHUDJHDQQXDOSRSXODWLRQJURZWKWRIDOOFRQVLVWHQWO\UHDFKLQJEHWZHHQDQG7KHSRSXODWLRQZLOOLQFUHDVHDWRWDORIMXVWRYHUWKHHQWLUHYH\HDUSHULRG

:LVFRQVLQVSRSXODWLRQLVHVWLPDWHGWRJURZRQO\EHWZHHQDQG7RSXWWKDWLQSHUVSHF-WLYHWKHVWDWHVSRSXODWLRQLQFUHDVHGEHWZHHQDQG,QRWKHUZRUGVZKDWRQFHWRRNRQO\\HDUVZLOOQRZWDNH

Of Boomers, Births, and Deaths7KHIXWXUHORRNRI:LVFRQVLQLVVKRZQLQ)LJXUH

7RGD\VVFKRROFKLOGUHQDUHIXWXUHSDUHQWVWKRVH

RIZRUNLQJDJHDUHWRPRUURZVUHWLUHHV%RWKZLOOVLJQLFDQWO\LPSDFWIXWXUHELUWKVDQGGHDWKV

%LUWKV6WDJQDWH'HDWKV$FFHOHUDWH'XULQJ:LVFRQVLQZLWQHVVHGMXVWRYHUELUWKVVHH)LJXUHSDJH7KDWQXPEHULVH[SHFWHGWRLQFUHDVHonly slightly over the next three decades, reaching DERXWGXULQJ

March 2014 Vol. 82 Number 33XEOLFDWLRQ1XPEHU86363HULRGLFDOSRVWDJHSDLGDW0DGLVRQ:LVFRQVLQ

Subscription Price: SHU\HDU3XEOLVKHGHDFKPRQWKH[FHSW-XO\E\WKH:LVFRQVLQ7D[SD\HUV$OOLDQFH1RUWK/DZQ$YHQXH0DGLVRQ:LVFRQVLQ

Postmaster:Send address changes to 7KH:LVFRQVLQ7D[SD\HU 1RUWK/DZQ$YHQXH0DGLVRQ:LVFRQVLQ3KRQH)D[(PDLOZLVWD[#ZLVWD[RUJ:HEVLWHZZZZLVWD[RUJ

Officers and Board of Directors:&')RUWQHU&KDLU0LOZDXNHH7/6SHUR9LFH&KDLU0LOZDXNHH-HUH'0F*DIIH\6HFUHWDU\7UHDVXUHU0LOZDXNHH

-/$GDPV%HORLW5$0HHXVHQ0LOZDXNHH+&1HZHOO0RVLQHH.'1XQOH\0LOZDXNHH-'4XLFN0DQLWRZRF-55LRUGDQ0DGLVRQ'56FKXK6WHYHQV3RLQW0'6LPPHU*UHHQ%D\&DURO:DUG.QR[-HIIHUVRQ5REHUW:HEVWHU0LOZDXNHH

Staff:7RGG$%HUU\3UHVLGHQW'DOH.QDSS5HVHDUFK'LUHFWRU*LQD6WDVNDO%XVLQHVV0DQDJHU6WHSKDQLH5XELQ5HVHDUFK$QDO\VW0HJDQ6DZOH([HFXWLYH$VVLVWDQW6KDURQ6FKPHOLQJ&RPPXQLFDWLRQV'LUHFWRU

Reproduction:0HGLDLVHQFRXUDJHGWRTXRWHFRQWHQWVZLWKFUHGLWWR:,67$;(OHFWURQLFUHSURGXFWLRQRUIRUZDUGLQJLVSURKLELWHGXQOHVVSULRUSHUPLVVLRQLVJUDQWHG6HQGUHTXHVWVWRZLVWD[#ZLVWD[RUJ

THE WISCONSIN TAXPAYER

Figure 1: Wisconsin Population Growth SlowsTotal in Millions (Line) and Avg. Annual % Change (Bars),1950-2040

VVVVVV (QGRI)LYH


+RZHYHUDVEDE\ERRPHUVDJH WKHQXPEHURIGHDWKV LQ:LVFRQVLQZLOO ULVHPXFK IDVWHU $ERXWUHVLGHQWVGLHGGXULQJEXWWKDWJXUHLVH[SHFWHGWRUHDFKDOPRVWGXULQJ7KXVZKLOH ELUWKV RXWQXPEHUHG GHDWKV E\ DERXWLQWKHPRVWUHFHQWGHFDGH:LVFRQVLQVQDWX-UDOLQFUHDVHZLOOEHQHDUHUGXULQJ

Moving In, or Moving Out?3UHGLFWLQJ:LVFRQVLQVQDWXUDOLQFUHDVHWKHGLI-

IHUHQFHEHWZHHQELUWKVDQGGHDWKVLVQRWGLIFXOW%XWHVWLPDWLQJIXWXUHSRSXODWLRQWRWDOVDOVRKLQJHVRQWKHQXPEHURISHRSOHPRYLQJLQDQGRXWRIWKHVWDWHZKLFKFDQEHYRODWLOHDQGKDUGWRSUHGLFW

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

7KH HFRQRP\ LV QRW WKH RQO\ IDFWRU KRZHYHUPLJUDWLRQ WR DQG IURP:LVFRQVLQ DOVR KDV DQ DJHFRPSRQHQW :KHWKHU GXH WR WHPSHUDWXUHRU WD[HVUHVLGHQWVLQWKHLUVDQGVWHQGWRPRYHRXWRIWKHVWDWHPRUHWKDQWKH\PRYHLQ7KHVDPHLVWUXHIRUWKRVHLQWKHLUVDQGHDUO\V6WXGHQWVDQG\RXQJSURIHVVLRQDOVOHDYH:LVFRQVLQWRDWWHQGFROOHJHVHHNHPSOR\PHQWRUQGKLJKHUSD\LQJZRUN

On the other hand, the state is a net importer of IDPLOLHVKHDGHGE\SDUHQWVLQWKHLUVDQGV2QHUHDVRQ IRUPHU UHVLGHQWV UHWXUQ LV WKDW VFKRROV KHUHDUHJRRGDQGIDPLO\IULHQGO\SXEOLFVHUYLFHVVXFKDVSDUNVDQGSOD\JURXQGVDERXQG:LVFRQVLQKDVDOVREHFRPHDQHWLPSRUWHURIVHQLRUVLQWKHLUV/LNH\RXQJIDPLOLHVDJLQJUHWLUHHVPD\EHIRUPHUUHVLGHQWVZKRUHWXUQWREHFORVHWRIDPLO\DQGWRKDYHEHWWHUDFFHVVWRTXDOLW\KHDOWKFDUH

/RRNLQJDKHDGVWDWHGHPRJUDSKHUVH[SHFWHFR-nomic rather than age patterns to drive migration over WKHQH[W\HDUV'XULQJWKH\DQWLFLSDWHQHDUO\PRUHSHRSOHPRYLQJLQWR:LVFRQVLQWKDQOHDYLQJVHH)LJXUH,QWKH\HDUVWKDWIROORZQHW

PLJUDWLRQVKRXOGUHPDLQSRVLWLYHEHIRUHXOWLPDWHO\GHFOLQLQJ LQ 6KRXOG DJH UDWKHU WKDQ WKHHFRQRP\GULYHIXWXUHPLJUDWLRQWKHLQRZZLOOOLNHO\EHOHVVSRVLWLYH

ECONOMICS OF POPULATION SHIFT2WKHUWKDQXQSUHGLFWDEOHPLJUDWLRQSDWWHUQVWKHUH

LVOLWWOHLQSRSXODWLRQIRUHFDVWVWKDWKDVQRWEHHQNQRZQIRUGHFDGHV

Workforce Stagnation :KLOHSRSXODWLRQFKDQJHVRYHUWKHQH[W\HDUV

ZLOODIIHFW:LVFRQVLQLQPDQ\ZD\VWKHPRVWVLJQL-FDQWLPSDFWVZLOOEHZRUNIRUFHVL]HDQGMREFUHDWLRQ7KLVKDVORQJEHHQNQRZQ,QWKHVWDWHVFKLHIODERUHFRQRPLVW WROGVWDWH OHDGHUV WKDWE\DW

Figure 3: Deaths on the Rise, Births Stagnate1980s-2030s

Figure 4: Net Migration Generally Positive, but SlowingFive-Year In-migration Minus Out-migration, 2015-40

'HDWKV

%LUWKV

1DWXUDO,QFUHDVH

Ending Year of Decade

(QGRI)LYH


HFRQRPLF GHYHORSPHQW DQG MRE FUHDWLRQ EXWLIZRUNHUFRXQWVFKDQJHOLWWOH WKRVHHIIRUWVZLOOEHLQDGHTXDWH(PSOR\PHQWFDQQRWH[SDQGEH\RQGWKHVL]HRIWKHZRUNHOLJLEOHSRSXODWLRQ

+LVWRU\VKRZVWKHWLHLVVWURQJ$V)LJXUHVKRZVDQHDUO\RQHWRRQHUHODWLRQVKLSH[LVWVEHWZHHQJURZWKLQHPSOR\PHQWDQGJURZWKLQWKHZRUNLQJDJHSRSXODWLRQ

%HWZHHQDQGLQVWDWHVZKHUHWKHZRUN-LQJDJHSRSXODWLRQH[SDQGHGUDSLGO\MREFUHDWLRQZDVUREXVW1HYDGDDQG$UL]RQDDUHH[DPSOHV,QVWDWHVOLNH:LVFRQVLQDQGLWVQHLJKERUVZKHUHSRSXODWLRQLQFUHDVHGPRUHVORZO\MREFUHDWLRQZDVHTXDOO\ZHDN

7KXVWKHH[SHFWHGIUHH]HLQWKHVL]HRI:LVFRQ-VLQVZRUNLQJDJHSRSXODWLRQRYHUWKHQH[W\HDUVZLOOPHDQOLWWOHRUQRORQJWHUPMREJURZWKVHHEOXHOLQHLQ)LJXUH,QWKHVKRUWWHUP:LVFRQVLQZLOOEHDEOHWRFUHDWHMREVEHFDXVHXQHPSOR\PHQWUHPDLQVUHODWLYHO\KLJKDERXW

7KUHHIDFWRUVFRXOGFKDQJHWKHMRESLFWXUHEXWRQO\PDUJLQDOO\)LUVWDJUHDWHUSHUFHQWDJHRIWKHZRUNLQJDJHSRSXODWLRQFRXOGHQWHUWKHZRUNIRUFH:KHQWKLVRFFXUUHGGXULQJWKHPLGVWKURXJKWKHODWHVMREVJUHZIDVWHUWKDQWKHZRUNLQJDJHSRSXODWLRQVHH)LJXUH6HFRQGHPSOR\HUVFRXOGUHO\WRDJUHDWHUGHJUHHRQROGHUZRUNHUVWKRVHRUROGHU6KRXOGVHQLRUVFRQWLQXHWRZRUNPRUHWKDQLQWKHSDVWMREFUHDWLRQFRXOGEHKLJKHU7KLUGZRUNHUVFRXOGPRYHKHUHIURPHOVHZKHUH+RZHYHUIRUHFDVWVRIZRUNHUFRXQWVDOUHDG\DVVXPHVLJQLFDQWLQPLJUDWLRQ

5LVLQJ:DJHV"For companies looking to expand, WKHGHDUWKRIQHZZRUNHUVZRXOG OLNHO\ UHVXOW LQD

OHDVWRIWKHVWDWHVSRSXODWLRQZLOOEHRYHU7KHODWHVWIRUHFDVWSXWVWKHJXUHDW

)URP6FKRROWR:RUNChanging school enroll-PHQWVIRUHVKDGRZWKHIXWXUHZRUNIRUFH3XEOLFVFKRROHQUROOPHQWVKDGDQXSWLFNGXULQJWKHODWHVDQGHDUO\VZLWKWKHEDE\ERRPHFKRWKHFKLOGUHQRIEDE\ERRPHUV+RZHYHUDVERRPHUVPRYHGSDVWWKHLUFKLOGEHDULQJ\HDUVWKHHFKREHJDQWRGLVDSSHDU6FKRROHQUROOPHQWLQZDVDERXWODVW\HDULWZDVOHVVWKDQ

7KHZULWLQJ LVRQ WKHZDOO $YH\HDUROG LQLVQRZ+HRUVKHLVHLWKHULQRUDERXWWRHQWHU WKHZRUNIRUFH :LWK VFKRRO HQUROOPHQWV DWEHVWDWVLQFHWKHODWHV)LJXUHVWDUNO\VXJ-JHVWVWKDWWKHVL]HRIRXUODERUIRUFHLVLQWKHHDUO\VWDJHVRIVWDJQDWLRQ

:KHUH$UH WKH:RUNHUV" -XVW DV EDE\ERRP-HUVZHUHDVVRFLDWHGZLWKDVKDUSULVHLQ:LVFRQVLQVZRUNIRUFHWKH\ZLOOQRZEHDVVRFLDWHGZLWKZRUNIRUFHVWDJQDWLRQ$VWKLVJURXSPRYHVIURPZRUNWRUHWLUH-PHQWWKHVWDWHVZRUNLQJSRSXODWLRQZLOOQRWJURZ

)OXFWXDWLQJ LQ D QDUURZ EDQG RI GHFOLQH DQGLQFUHDVHWKHZRUNLQJDJHSRSXODWLRQLVH[-SHFWHGWRGHFOLQHEHWZHHQDQGVHHUHG OLQH LQ)LJXUH $QQXDO JURZWK LV FXUUHQWO\DYHUDJLQJDPHDJHU,WLVH[SHFWHGWRIDOOSHU\HDUGXULQJWKHVDQGWKHQUHPDLQQHDUO\XQ-FKDQJHGGXULQJWKHIROORZLQJGHFDGH%HWZHHQDQGZRUNHUQXPEHUVZLOOLQFUHDVHMXVW

3RSXODWLRQDQG-RE*URZWK/LQNHG,IGHPRJUD-SK\LVGHVWLQ\DQGLWLVWKHQ:LVFRQVLQVHFRQRPLFIXWXUHLVFORXG\3ROLWLFLDQVWRXWHIIRUWVWRSURPRWH

Figure 6: Job Numbers Track Working-Aged PopulationIn Millions, Actual (1980-2010), Projected (2010-40)

Figure 5: Writing on the WallPublic School Enrollments (Thousands), 1985-2013

2.69

3.13

3.42 3.40

1.5

2.0

2.5

3.0

80 85 90 95 00 5 10 15 20 25 30 35 40

D-11


ODERUVKRUWDJH7KLVZRXOGEHSRVLWLYHIRUZRUNHUV6XSSO\DQGGHPDQGZLOOGULYHXSZDJHVQRZPRUHWKDQOHVVWKDQQDWLRQDODYHUDJHV$ODERUVKRUW-DJH FRXOG DOVR HQFRXUDJHZRUNHUV WRZRUN ORQJHUDQGUHWLUHODWHU

$ ODERU VKRUWDJHZRXOG DOVRPDJQLI\ WKH HFR-QRPLFIDOORXWIURPDIDLOXUHWRPD[LPL]HVWXGHQWVXF-FHVVDQGKLJKVFKRROJUDGXDWLRQ1RVWDWHFDQDIIRUGLQDGHTXDWHO\SUHSDUHGKLJKVFKRROGURSRXWVZKHQLWQHHGVHYHU\SRVVLEOHZRUNHU

Student-Age Populations Flat:KDWFRPHVDIWHUWKHEDE\ERRPHFKRVZRUNLQJ

\HDUVLVQRPRUHHQFRXUDJLQJ:LVFRQVLQVVFKRRODJHSRSXODWLRQLVH[SHFWHGWRJURZDPRGHVWEHWZHHQDQG

6LQFH VWXGHQWV DUH IXWXUHZRUNHUV ODERU IRUFHJURZWKZLOOOLNHO\UHPDLQQHJOLJLEOHXQWLOWKHVWDWHV\RXQJHVWDJHJURXSEHJLQVWRH[SDQGVRPHWKLQJGH-PRJUDSKHUVGRQRWH[SHFWIRUVHYHUDOGHFDGHVVHH)LJ-XUHSDJH$IWHUGHFOLQLQJXQWLOWKHDJHJURXSZLOOLQFUHDVHDQQXDOO\XQWLODQGHYHQOHVVGXULQJWKHIROORZLQJGHFDGH%HWZHHQDQGVWXGHQWQXPEHUVDUHH[SHFWHGWRGHFOLQH

Baby Boomers Retire :KDWPDNHV WKHVH QHZ IRUHFDVWV HYHQPRUH

DWWHQWLRQJHWWLQJLVWKHFRPELQHGHIIHFWRIDQRJURZWKZRUNIRUFHDQGDUDSLGO\ULVLQJQXPEHURIUHWLUHHVVHH7DEOHSDJH

:KLOH:LVFRQVLQVWRWDOSRSXODWLRQLVH[SHFWHGWRJURZEHWZHHQDQGWKHQXPEHURI

UHWLUHHVRUROGHUZLOOQHDUO\GRXEOHXSDVERRPHUV UHWLUH%HWZHHQDQG UHWLUHHQXPEHUVDUHH[SHFWHGWRULVHPRUHWKDQYHWLPHVWKHLQFUHDVHLQWKHRYHUDOOSRSXODWLRQ(YHQWKRXJKLWVJURZWKZLOOVORZLQVXEVHTXHQW\HDUVWKHUHWLUHHSRSXODWLRQZLOOUHPDLQ:LVFRQVLQVIDVWHVWJURZLQJDJHJURXSWKURXJK

$QHDUGRXEOLQJLQWKHQXPEHURIVHQLRUVFRXSOHGZLWKOLWWOHFKDQJHLQWKHUHVWRIWKHSRSXODWLRQPHDQVWKHVKDUHRIWKHVWDWHVSRSXODWLRQRUROGHUZLOOLQFUHDVHIURPLQWRLQ3XWDQRWKHUZD\LQ:LVFRQVLQKDGVHQLRUVIRUHYHU\ ZRUNLQJDJH UHVLGHQWV %\ WKDWJXUHZLOOULVHWR

(FRQRPLF,PSDFW7KHHFRQRPLFFRQVHTXHQFHVRIWKLVJURZLQJQXPEHURIVHQLRUVZLOOEHPDUNHG7KHHOGHUO\WHQGWRSXUFKDVHPRUHVHUYLFHVDQGIHZHUJRRGVWKDQ\RXQJHUSHRSOHDQGKHDOWKVHUYLFHVZLOOEHSDUWLFXODUO\LQGHPDQG$OWKRXJKHPSOR\PHQWLQERWK:LVFRQVLQDQGQDWLRQDOO\KDVVKLIWHGWRVHUYLFHLQGXVWULHVRYHU WKHSDVW\HDUVSRSXODWLRQ VKLIWVRYHUWKHQH[W\HDUVZLOODFFHOHUDWHWKHFKDQJH

:LVFRQVLQV KRXVLQJPDUNHWZLOO DOVR EH LP-SDFWHGDVEDE\ERRPHUVUHWLUHGRZQVL]HDQGWUDGHWKUHH RU IRXUEHGURRPKRPHV IRU VPDOOHU KRXVHVFRQGRPLQLXPV RU DSDUWPHQWV 3ULFHV IRU VPDOOHUKRXVHVDQGFRQGRVVKRXOGULVHZLWKLQFUHDVHGGHPDQGEXWWKHPDUNHWIRUODUJHUKRPHVZLOOVXIIHU

Impact on Incomes1RWRQO\ZLOOSRSXODWLRQVKLIWVDIIHFWWKHHFRQRP\

DQGMREJURZWKWKH\ZLOODOVRLPSDFWVWDWHLQFRPH$YHUDJH LQFRPHV JHQHUDOO\ ULVHZLWK DJH EHIRUHIDOOLQJ DW UHWLUHPHQW &HQVXV%XUHDXJXUHV IURPKLJKOLJKWWKHSDWWHUQ,QKRXVHKROGVKHDGHGE\

Figure 6: Job Numbers Track Working-Aged PopulationIn Millions, Actual (1980-2010), Projected (2010-40)

-RE*URZWK

:RUNLQJ$JH3RSXODWLRQ*URZWK

0LQQ

:LV,OO,RZD 0LFK

1HY

$UL]

Figure 7: Jobs and Working-Age Population% Change by State, 1980-2011

3.42 3.40

10 15 20 25 30 35 40

D-12


VRPHRQHXQGHULQFRPHDYHUDJHGDERXWLQ:LVFRQVLQ$YHUDJHLQFRPHVZHUHKLJKHULQROGHUKRXVHKROGV LQ WKH DJH JURXS DQGIRUWKRVHWR+RXVHKROGLQFRPHVIRUUHWLUHHVZHUHORZHUDYHUDJLQJRQO\

7KHVHLVPLFGHPRJUDSKLFVKLIWIURPKRXVHKROGVLQWKHDJHJURXSWRWKRVHZKHUHUHWLUHHVSUH-GRPLQDWH QHJDWLYHO\ LPSDFWV DYHUDJH LQFRPHV ,I:LVFRQVLQVSRSXODWLRQ ORRNHGOLNHV LQWHUPVRIDJHDYHUDJHVWDWHLQFRPHVZRXOGEHDERXWORZHU

$JURZLQJVWDWHSRSXODWLRQZLOODLGWRWDOLQFRPHJURZWKGXULQJ +RZHYHUZKHQ D VORZO\ULVLQJSRSXODWLRQLVFRPELQHGZLWKWKHSURMHFWHGGH-PRJUDSKLFVKLIWWRWDOLQFRPHZLOOLQFUHDVHMXVWRUDQDYHUDJHRIRQO\SHU\HDURYHU\HDUVMore rapid income growth can only come from ris-LQJZDJHV5HJDUGOHVVLQFRPHJURZWKLVXQOLNHO\WRPDWFKSDVWDYHUDJHVRILQWKHVRUHYHQGXULQJWKHSUH*UHDW5HFHVVLRQV

PUBLIC FINANCEModest income growth and a shift from goods-

SXUFKDVLQJPLGGOHDJHUV WR VHUYLFHVSXUFKDVLQJUHWLUHHVKDVUHYHQXHLPSOLFDWLRQVIRUERWKVWDWHDQGORFDOJRYHUQPHQWV

Slowing Tax Collections,QGLYLGXDOLQFRPHDQGVDOHVWD[HVSURYLGHPRUH

WKDQRIVWDWHJHQHUDOIXQGUHYHQXHV6ORZLQFRPHgrowth will restrict growth in income tax collections RYHUWKHQH[W\HDUV$GGLWLRQDOO\DJURZLQJVKDUHRIDOOLQFRPHZLOOFRPHIURP6RFLDO6HFXULW\ZKLFK:LVFRQVLQQRORQJHUWD[HV7KDWZLOOIXUWKHUDGYHUVHO\LPSDFWLQFRPHWD[FROOHFWLRQV

0RUHRYHU VLQFH VHQLRUV SXUFKDVH IRRG GUXJVPRUHVHUYLFHVJHQHUDOO\QRWWD[DEOHDQGIHZHUJRRGVWD[DEOHDERRPLQVHQLRUVZLOOVORZVDOHVWD[FRO-OHFWLRQJURZWK

,QFUHDVLQJ'HPDQGIRU3XEOLF6HUYLFHVTo the H[WHQWWKDWVHQLRUVXVHJRYHUQPHQWVHUYLFHVPRUHWKDQRWKHUVWKHULVHLQUHWLUHHVZLOOSXWIXUWKHUSUHVVXUHRQstate and local government spending at the same time WKDWUHYHQXHVLQFUHDVHOLWWOH

A slowdown in tax collections and more demand IRUSXEOLFVHUYLFHVDUHDGLIFXOWFRPELQDWLRQWKDWZLOOIRUFHVWDWHDQGORFDOJRYHUQPHQWVWRFKRRVHEHWZHHQFXWWLQJSURJUDPVDQGLQFUHDVLQJWD[HV

6FKRRO)XQGLQJ7URXEOHV":LVFRQVLQVSRSXOD-WLRQVKLIWKDVDOUHDG\DIIHFWHGSXEOLFVFKRROQDQFHV/LWWOHRUQRJURZWKLQVFKRROHQUROOPHQWVIRUWKHSDVW\HDUVGHSUHVVHGVFKRROUHYHQXHV%HFDXVHVWDWHPDQGDWHGUHYHQXHOLPLWVDUHGLUHFWO\WLHGWRVWXGHQWFRXQWVOLWWOHRUQRLQFUHDVHLQHQUROOPHQWVPDNHVLWPRUHGLIFXOWIRUVFKRROVWRLQFUHDVHUHYHQXHVXQOHVVWKH\UHJXODUO\DVNIRUYRWHUDSSURYDOYLDUHIHUHQGXP

3DVVLQJUHIHUHQGDZLOOOLNHO\EHFRPHPRUHGLI-FXOWRYHUWKHQH[W\HDUV/LYLQJRQ[HGLQFRPHVUHWLUHHVDUHPRUHDIIHFWHGE\ULVLQJSURSHUW\WD[HVWKDQare wage-earners with rising incomes, and they might EH OHVV OLNHO\ WR VXSSRUWKLJKHUSURSHUW\ WD[HV WKDWFRPHZLWKVXFFHVVIXOUHIHUHQGD6LQFHUHWLUHHVYRWHDWVLJQLFDQWO\KLJKHUUDWHVWKDQ\RXQJHUUHVLGHQWVUDSLGJURZWKLQWKHVHQLRUSRSXODWLRQZLOOFUHDWHPRUHREVWDFOHVWRSDVVLQJVFKRROUHIHUHQGD

COUNTY VARIATION7KHSRSXODWLRQG\QDPLFV:LVFRQVLQZLOOH[SHUL-

HQFHOLWWOHFKDQJHLQELUWKVDQGULVLQJQXPEHUVRIUHWLUHHVZLWK WKHLU HYHQWXDO GHDWKVLV D VWDWHZLGH

Figure 8: Total Populations by AgeIn Millions, Actual (1970-2010), Projected (2010-40)

-

<

2010 2020 2030 2040 % Chg.0 to 19 20 to 64 64+ Total

Residents (Millions)

Table 1: Working Aged Group StagnantResidents (Millions), % Chg., 2010-40

D-13


SKHQRPHQRQ +RZHYHU VRPHSDUWV RI:LVFRQVLQZLOOEHPRUHDIIHFWHGWKDQRWKHUV7KHUDSLGO\DJLQJ1RUWKZLWKOLWWOHRUQRQDWXUDOLQFUHDVHLQSRSXODWLRQIDFHVGZLQGOLQJQXPEHUVRIUHVLGHQWV&RXQWLHVQHDUmetropolitan areas or with access to interstate high-ZD\VZLOOJURZDWDPRGHUDWHUDWH

:KLOHWRWDOVWDWHSRSXODWLRQZLOOLQFUHDVHRYHU WKHQH[W \HDUV FKDQJHVZLOO UDQJH IURPDGHFOLQHLQ3ULFH&RXQW\WRDLQFUHDVHLQ6DLQW&URL[2QO\FRXQWLHVZLOOJURZIDVWHUWKDQWKHVWDWHDYHUDJHZLOOJURZVORZHU

Most Counties Losing Workers%HWZHHQDQGWKHZRUNLQJDJHSRSXOD-

WLRQLVH[SHFWHGWRIDOOVWDWHZLGH,QRIWKHVWDWHV FRXQWLHV WKH GHFOLQHZLOO EH ODUJHU VHHPDSZLWKQRUWKHUQFRXQWLHVWDNLQJWKHELJJHVWKLWV

7KHFRPELQHGFRXQW\DUHD$RQWKHPDSIURP%DUURQLQWKH:HVWWR/DQJODGHLQWKH(DVWDQGUXQQLQJWR%D\HOG$VKODQGDQG,URQFRXQWLHVLQWKH1RUWKZLOOVHHDQHDUGURSLQWKHQXPEHURIZRUNLQJDJHUHVLGHQWV3ULFHDQG%D\HOGDUHH[SHFWHGWRH[SHULHQFHWKHODUJHVWGHFOLQHVLQWKHVWDWH

Three other areas are expected to see declines of PRUH WKDQ QRUWKHDVWHUQ:LVFRQVLQ % IURP.HZDXQHH&RXQW\QRUWKWR)ORUHQFHFHQWUDO:LVFRQ-VLQ&IURP*UHHQ/DNHWR:RRGDQGVRXWKZHVWHUQ:LVFRQVLQ'

The map shows growth will generally follow ma-MRUKLJKZD\VIURP%URZQ&RXQW\VRXWKWR.HQRVKDWKHQQRUWKZHVWWKURXJK'DQHDQG6DXNWR6DLQW&URL[&RXQW\ .HQRVKDDQG6DLQW&URL[FRXQWLHVEHQHWfrom growth in the Chicago and Minneapolis areas, UHVSHFWLYHO\

North Losing Kids, As Well(FRQRPLF SURVSHFWV IRU QRUWKHUQ:LVFRQVLQ

EHFRPHRIJUHDWHUFRQFHUQZKHQFKDQJHVLQVWXGHQWSRSXODWLRQVDUHFRQVLGHUHG'XULQJHQUROO-PHQWVLQYHQRUWKHUQVFKRROGLVWULFWVGHFOLQHGPRUHWKDQLQDQRWKHUWKH\GURSSHGPRUHWKDQ

7KDW SDWWHUQ LV H[SHFWHG WR FRQWLQXH 'XULQJVWDWHGHPRJUDSKHUVH[SHFWWKHVFKRRODJHSRSXODWLRQWRGURSPRUH WKDQLQ%D\HOGDQG3ULFHFRXQWLHV 'HFOLQHVZLOO WRSLQ$VKODQG/LQFROQ3HSLQDQG5XVNFRXQWLHV

7KLVZLOO KDYH ERWK VKRUW DQG ORQJWHUP FRQ-VHTXHQFHV )LUVW LW UDLVHV TXHVWLRQV DERXW KRZ WRHGXFDWHFKLOGUHQLQVSDUVHO\SRSXODWHGDUHDV0RUH

WKDQQRUWKHUQGLVWULFWVDOUHDG\KDYHIHZHUWKDQYHVWXGHQWVSHUVTXDUHPLOHPDNLQJVFKRROWUDQVSRUWD-WLRQFRVWO\2IWKHVHPRUHWKDQDUHVPDOOHQUROO-LQJIHZHUWKDQVWXGHQWV:,67$;UHVHDUFKKDVshown that small districts lack scale economies that DOORZODUJHUGLVWULFWVWRUHGXFHFRVWV)XUWKHUHQUROO-PHQWGHFOLQHVZLOOH[DFHUEDWHWKHVHFKDOOHQJHV

7KHIXWXUHRIWKHZRUNIRUFHEH\RQGKDVQRWEHHQH[DPLQHGKHUH%XWKDYLQJIHZHUVWXGHQWVKDVZRUNIRUFHLPSOLFDWLRQVDIWHU'HFOLQLQJVWXGHQWSRSXODWLRQVRYHUWKHQH[W\HDUVSRUWHQGVFRQWLQXHGZRUNIRUFHVKULQNDJHRYHUWKHQH[W

FINAL THOUGHT,Q LQ :LVFRQVLQV)XWXUH

The Wisconsin Taxpayers Alliance, founded in 1932, is the states oldest and most respected private government-research organization. Through its publications, civic lectures, and school talks, WISTAX aims to improve Wisconsin government through citizen education. Nonprofit, nonpartisan, and independently funded, WISTAX is not affiliated with any groupnational, state, or localand receives no government support. In accordance with IRS regulations, WISTAX financial statements are available on request.

3(5,2',&$/68636

Wisconsin Taxpayers Alliance.ORTH,AWN!VENUEs-ADISON7)tWWWWISTAXORG

taxwis

SchoolFacts, at a Discount. :LWK WKH HQG RI WKHVFKRRO\HDU MXVWDURXQG WKHFRUQHU:,67$;UHVHDUFKHUVDUHEHJLQQLQJZRUNRQSchoolFacts147RFOHDULQYHQWRU\ZHDUHRIIHULQJRXU:LVFRQVLQ7D[SD\HUVXEVFULEHUVDRQHWLPHGLVFRXQW RQ WKH ERRN SchoolFacts KHOSV \RXFRPSDUH\RXUGLVWULFWZLWKRWKHUVRQVSHQGLQJWD[HVWHVWVFRUHVVWDIQJDQGPDQ\RWKHULPSRUWDQWPHDVXUHV,WFDQ

QRZ EH SXUFKDVHG IRU MXVWDQGLVDPXVWKDYHfor anyone interested in :LVFRQVLQ SXEOLF VFKRROV6XSSOLHVDUHOLPLWHG2UGHU\RXU FRS\ E\ YLVLWLQJZLVWD[RUJ RU E\ FDOOLQJ

WISTAX NOTES

Wisconsin Income Rising. :LVFRQVLQSHUFDSLWDSHUVRQDO LQFRPH 3&3, URVH LQ WKH VHYHQWKODUJHVWLQFUHDVHDPRQJWKHVWDWHVVHHFKDUW1DWLRQDOSHUFDSLWDLQFRPHFOLPEHG

$PRQJQHLJKERULQJVWDWHVRQO\LQFRPHLQ,RZDURVHPRUH,QFRPHJURZWKLQ0LFKLJDQWK,OOLQRLVWKDQG0LQQHVRWDVWWUDLOHG:LVFRQVLQ

,Q DGGLWLRQ WR UHSRUWLQJ WKH QHZ LQFRPHJXUHV IRUWKH'HSDUWPHQWRI&RPPHUFH%XUHDXRI(FRQRPLF$QDO\VLVDOVRUHYLVHGLQFRPHQXPEHUVIRUEDVHGRQQHZLQIRUPDWLRQ7KHVHFKDQJHVVKRZ:LVFRQVLQLQ-FRPHZDVKLJKHUWKDQSUHYLRXVO\UHSRUWHG

7KHQHZJXUHVDOVRVKRZWKH%DGJHU6WDWHRXWSHU-IRUPLQJWKHQDWLRQGXULQJ2YHUWKH\HDUV:LVFRQVLQ SHU FDSLWD LQFRPH URVH FRPSDUHG WRIRUWKHQDWLRQ,QFRPHVKHUHDOVRURVHPRUHWKDQLQ ,OOLQRLV 0LFKLJDQ DQG0LQQHVRWD

Wisconsin Government Employment. ,Q:LVFRQVLQVWDWHDQGORFDOJRYHUQPHQWVHPSOR\HGIXOOWLPHHTXLYDOHQW)7(HPSOR\HHVRUSHUVWDWH UHVLGHQWV 1DWLRQDOO\ JRYHUQPHQW HPSOR\PHQWDYHUDJHG)7(V:LVFRQVLQZDVWKORZHVWLQJRY-HUQPHQW HPSOR\HHV SHU FDSLWD &HQVXV%XUHDXJXUHVVKRZWKDWGXULQJWKH%DGJHU6WDWHDYHUDJHGJRYHUQPHQWZRUNHUVSHUSHRSOH7KDWJXUHGURSSHGWRLQIHOOIXUWKHUWRLQEXWUHERXQGHGVOLJKWO\LQ,Q:LVFRQVLQRIDOOJRYHUQPHQWHPSOR\HHVDUHHPSOR\HGE\VWDWHJRYHUQPHQWWKHFRPSDUDEOHQDWLRQDOJXUHLV

Wis. Income Growth Seventh HighestPer Capita Personal Income Change, U.S. and Selected States, 2013

1' 9W 2UH ,D ,G 5, :LV 0LFK ,OO0LQQ 86

D-15

1The Benefit of a More Educated Workforce to Individuals and the Economy

National Governors AssociationChairs Initiative 2013-2014

Education and Training for Tomorrows Jobs

D-16

THE NATIONAL GOVERNORS ASSOCIATION (NGA), founded in 1908, is the collective voice of the nations governors and one of Washington, D.C.s, most respected public policy organizations. Its members are the governors of the 55 states, territories, and commonwealths. NGA provides governors and their senior staff members with services that range from representing states on Capitol Hill and before the Administration on key federal issues to developing and implementing innovative solutions to public policy challenges through the NGA Center for Best Practices. NGA also provides management and technical assistance to both new and incumbent governors.

THE NGA CENTER FOR BEST PRACTICES (NGA Center) is the only research and development firm that directly serves the nations governors and their key policy staff. Governors rely on the NGA Center to provide tailored technical assistance for challenges facing their states, identify and share best practices from across the country, and host meetings of leading policymakers, program officials and scholars. Through research reports, policy analyses, cross-state learning labs, state grants, and other unique services, the NGA Center quickly informs governors what works, what does not, and what lessons can be learned from others grappling with similar issues.

For more information about NGA and the NGA Center, please visit www.nga.org.

D-17

T h e B e n e f i t o f a M o r e E d u c a t e d Wo r k f o r c e t o I n d i v i d u a l s a n d t h e E c o n o m y

Worker productivity is a major factor affecting a states long-term prospects for economic growth.1 More highly educated and trained workers typically are more productive than those who have less education and training.2 And more productive workers generally earn higher incomes.

States are generally limited in their ability to increase worker productivity, except for the substantial role that governors play in improving the quality of the education pipeline. On average, states account for 43 percent of all spending on elementary and secondary education and direct 58 percent of spending on public postsecondary education. 3 To the extent that governors can establish policies and allocate funds to raise the educational attainment of their current and future workforce, they can expand economic opportunities both for individuals and for their states economy overall.

To develop state policies and funding priorities that support economic growth by increasing the quality of its current and future workforces education and training, a governor needs better information about the job skills employers require. Pairing that information with an understanding of how well the skills and education level of a states current population matches with projected employment demand, a governor is then well positioned to craft effective education and workforce training policies. Such policies can be aimed at closing specif ic skill gaps that yield significant benefits compared to their costs for both the states citizens and employers.

National Governors Association (NGA) Chair Oklahoma Gov. Mary Fallin launched a yearlong effort to better prepare Americans to work in the new economy through improved postsecondary education and workforce training. America Works: Education and Training for Tomorrows Jobs raises awareness about the significant benefits for individuals, businesses, and state economies when governors act to raise their populations educational attainment and better align their education and training systems with the likely future demands of employers.

1 Other factors include increases in the supply of labor and capital as well as improvements in technology.2 L. Leslie and P. Brinkman, The Economic Value of Higher Education (New York: Macmillan, 1988) and W. Becker and D. Lewis, eds., Higher Education and Economic Growth (Norwell, MA: Kluwer, 1993).3 S. Q. Cornman, Revenues and Expenditures for Public Elementary and Secondary School Districts: School Year 200910 (Fiscal Year 2010) (Washington, DC: National Center for Education Statistics, April 2013), http://nces.ed.gov/pubs2013/2013307.pdf, and State Higher Education Finance FY 2010 (Boulder, CO: State Higher (GXFDWLRQ([HFXWLYH2IFHUVKWWSZZZVKHHRRUJVLWHVGHIDXOWOHVSXEOLFDWLRQV6+()B)

2Th e M i s m a t c h B e t we e n t h e Ta l e n t We H ave a n d t h e Ta l e n t We Wi l l N e e d : I m p l i c a t i o n s fo r I n d i v i d u a l s a n d S t a t e E co n o m i e s

For most of the 20th century, Americans led the world in educational attainment. That position provided a substantial catalyst to what came to be known as the American Century, a period in which the United States leveraged its broad educational base and other resources to lead the world in economic growth, wealth creation, and technological innovation.4

Now, more than a decade into the 21st century, Americans risk falling behind as technological advances accelerate demands for talented workers. Today, the United States trails 11 other developed nations in postsecondary attainment among those between 25 and 34 years of age. It has fallen even farther behind in the percentage of young adults graduating from high school, trailing 21 developed nations.5 Even more startling are the results of the 2012 Program for International Student Assessment exam, which measures the performance of 15-year-olds in 65 countries. U.S. students ranked 20th, 23rd, and 30th in reading, science, and math, respectively, a decline in each subject.6

Those troubling trends have direct economic consequences for states and individuals. Failing to provide all Americans with opportunities to successfully navigate postsecondary education will limit far too many students and members of the current workforces potential to enhance their livelihood and contribute to the economy. Similarly, a lack of skilled workers in a regional economy can constrain growth, limiting employers ability to expand unless they move jobs to where talent resides or accept the cost of upgrading the skills of local workers.

As the demand for highly educated workers has increased, employment opportunities for those without postsecondary credentials have declined.

4 C. Goldin and L. Katz, The Race Between Education and Technology (Cambridge, MA: Belknap of the Harvard UP, 2009).5 Education at a Glance 2013: OECD Indicators, charts A1.2 and A2.1 (Paris: OECD Publishing, 2013).6 National Center for Education Statistics, Program for International Student Assessment (PISA), Selected Findings from PISA 2012, http://nces.ed.gov/surveys/pisa/pisa2012/index.asp.

Failing to provide all Americans with opportunities to successfully navigate postsecondary education will limit far too many students potential to enhance their livelihood and contribute to the economy.

D-19

3The current lifetime wage premium for an individual who has a two- or four-year degree is $423,000 and $964,000, respectively, compared with a person who has a high school diploma.7

Looking at this issue in another way, the average person who graduates high school and then attains an associates degree earns $1,727,000 over a lifetime. A typical high school graduate, in contrast, earns $1,304,000 over the same period. This roughly 32 percent variation in individual earnings may be the difference between living below or above the poverty line. In addition, the increased wages represent new dollars that can then be spent in the local economy, thereby driving business growth and expanding state and local tax revenues.

Th e N e e d t o R a i s e S k i l l Le ve l s t o a N e w M i n i m u m

A postsecondary degree or relevant workforce certif ication is the new minimum for the future workforce to meet the demands of the emerging job market and access a middle-class life or beyond. Fifty years ago, nearly 80 percent of jobs required only a high school diploma or less, and most paid a good wage. Today, that number has dropped to 35 percent for jobs available to high school graduates and dropouts, and more than two-thirds of those jobs pay less than $25,000 a year.8 The emerging economy will provide few well-paying jobs for workers who merely have a high school education or less. In addition, researchers estimate that approximately half of all job openings over the next decade will require more than a high school diploma, although not necessarily a four-year degree.9

Every state in the nation can realize significant economic and social benefits from providing additional educational opportunities for its citizens. Based on trends that show

7 A. Carnevale, S. Rose, and B. Cheah, The College Payoff: Education, Occupations, Lifetime Earnings (Washington, DC: Georgetown University Center on Education and the Workforce, August 2011), http://www9.georgetown.edu/grad/gppi/hpi/cew/pdfs/collegepayoff-complete.pdf.8 National Governors Association Chairs Initiative 20132014, America Works: Education and Training for Tomorrows Jobs (Washington, DC: National Governors Association Center for Best Practices, 2013), KWWSZZZQJDRUJOHVOLYHVLWHV1*$OHVSGI&,$PHULFD:RUNVSGI.9 A. Carnevale, N. Smith, and J. Strohl, Recovery: Job Growth and Education Requirements Through 2020 (Washington, DC: Georgetown University Center on Education and the Workforce, August 2013), http://www9.georgetown.edu/grad/gppi/hpi/cew/pdfs/Recovery2020.FR.Web.pdf.

A postsecondary degree or relevant

workforce certification is the new minimum for the future workforce to

meet the demands of the emerging job market and access a middle-class life

and beyond.

new minimum

D-20

the potential economic growth by industry, Moodys Analytics projects that employers nationwide could demand slightly more than 24 million workers with a postsecondary degree between 2013 and 2030.

Comparing that forecast with Moodys projection of educational attainment of the population over the same period, there would be a shortfall in excess of 3 million workers with postsecondary degrees.

Such a shortfall would limit growth in affected industries as employers cut back on production, employed less educated (and presumably less productive) workers, and or bid up the wages of more highly trained workers thereby raising industrys costs. More positively, meeting the projected industry demand would allow businesses to expand and incomes to rise by an estimated $540 billion over the next 17 years.

Without a substantial shift in the current system to enable workers to attain these higher levels of education, there will not be a sufficient supply of individuals with the new minimum of postsecondary education credentials (a relevant workforce certif ication or associates degree or above). Failing to provide more students or members of the current workforce with opportunities to successfully navigate postsecondary education will limit many peoples ability to achieve their potential and a higher standard of living. The chart below shows the nations projected misalignment between the education level Americans over 25 attained in 2010 versus the projected level of education required for new jobs in 2030. While the number of young people with postsecondary credentials has continued to increase since the 1980s, the increase has not kept pace with the needs of employers.

D-21

C l o s i n g S k i l l G a p s by A l i g n i n g a S t a t es E d u c a t i o n Pi p e l i n e w i t h t h e Ta l e n t N e e d s o f i t s I n d u s t r y

Through the America Works initiative, NGA has identif ied a set of actions that governors can take to improve the educational attainment of their citizens and the alignment of those credentials with employer demand. The following four policy components, undertaken in an integrated approach, suggest ways governors can improve and better align state education and training institution results with industry demand for a talented workforce.

Articulate and implement a strong vision connecting education and the workforce to have more Americans achieve the new minimum;

Use data to inform policy, track progress, and measure success;

Build partnerships to get results; and

Modify the use of resources and incentives to support the integrated vision.

The precise mix of policies and priorities that a governor may enact to close specif ic educational attainment gaps will depend on the states unique economic composition and demographics, the current educational attainment of its citizens, and the quality of its education pipeline. Examples of actions governors can take under each of these four policy components are detailed below.

A r t i c u l a t e a n d i m p l e m e n t a s t ro n g v i s i o n co n n e c t i n g e d u c a t i o n a n d t h e wo r k fo rce t o h ave m o re A m e r i c a n s a c h i e ve t h e n e w m i n i m u m .

Declare and act to implement a statewide vision to connect the education pipeline with the needs of the states economy. Governors can publicly articulate a vision to connect the education pipelinekindergarten through 12th grade (K12), career tech and workforce training programs, and higher educationwith the needs of their states economy. The declaration should include specif ic goals and actions to achieve stronger results for a states citizens and its economy. It should elevate the message that a relevant workforce certif ication or postsecondary degree is the new minimum for achieving a middle-class lifestyle or beyond.

D-22

Us e d a t a t o i n fo r m p o l i c y, t ra c k p ro g re s s, a n d m e a s u re s u cce s s.

Identify key policy and budget questions. Governors can elevate key policy questions to improve the alignment between the education pipeline and workforce needs. Key questions include:

How many students complete high school prepared for college or career traininglevel work? How many students leave high school with college credit and industry credentials?

What are the quality, capacity, and efficiency of postsecondary education and workforce training providers?

How many and what percentage of college or career training program graduates get high-wage, high-demand jobs?

Integrate and use education and workforce data to answer key policy and budget questions. Governors can support the alignment and use of education, workforce, and economic development data, including longitudinal data systems and real-time labor market data, to answer key policy questions and establish policy and budget priorities.

B u i l d p a r t n e r s h i p s t o g e t re s u l t s .

Provide state support for cross-system partnerships tied to the vision. Governors can strengthen state partnerships to launch new or improve existing initiatives that support more precise alignment between their state education and workforce training systems and the needs of their economy. Such partnerships may include preschool-to-grade 20 (P20) councils and state workforce investment boards (WIBs). Examples of actions include:

Coordinating strategic planning processes to integrate the missions of key state agencies, including education, workforce training, and economic development;

Bringing together leaders from industry and education to agree on standards (for example, more rigorous and relevant K12 standards), competencies, and a system of quality credentials tied to emerging high-wage, high-demand careers;

Enacting policies and programs (for example, dual-credit courses, career-tech programs, career pathway systems

august 2014 uw system board of regents budget request

Documents